On April 27, the company sent a memo to retirees saying their plans will continue to be funded as required by law, The Wichita Eagle reports. However, rules for a Pension Benefit Guaranty Corporation (PBGC) takeover say a company with an underfunded plan can apply for a “distress termination,” if the company can prove to a “bankruptcy court or to the PBGC that the employer cannot remain in business unless the plan is terminated.”
In Hawker Beechcraft’s bankruptcy filing with the U.S. Bankruptcy Court in the Southern District of New York, the PBGC is listed as the company’s largest creditor, the news report said. Collectively, Hawker Beechcraft’s three pension plans are 56% funded, with $769 million in assets to cover $1.4 billion in benefits. If Hawker Beechcraft ended the plans, PBGC would pay $533 million of the $611 million shortfall, according to a statement from the PBGC.
The company told employees that other benefits, such as health benefits, will continue uninterrupted. Their 401(k) benefits will also continue, but with some delays. Bankruptcy restrictions will delay matching contributions to the fund for about 25 days.PBGC Director of Communications J. Jioni Palmer said in a statement that the agency’s top priority is to work with companies so they can keep their pensions going. “We are committed to working with Hawker Beechcraft and its creditors so that the company can reorganize successfully, while also maintaining the retirement security of its nearly 20,000 workers and retirees,” he said.
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